Helmerich Warns Other Firms After Venezuela Seizes Oil Rigs

Helmerich & Payne (HP) is warning other oil-field-services companies doing business in Venezuela after the drilling contractor saw 11 of its idled rigs expropriated last week by the government of President Hugo Chavez.

In a press release Tuesday, the Oklahoma-based company said other oil-services firms should be contemplating on whether to stay in Venezuela. It also criticized the way state oil company Petroleos de Venezuela, or PDVSA, conducts its business.

"Reflecting on last week's forced exit from Venezuela, it is clear now that PDVSA was not interested in both sides achieving commercial terms to return our rigs to work," Helmerich said. "That approach only heightens concerns for our oil-field-service peers contemplating their future there, as it should."

The Chavez-led government, which has nationalized large parts of its all-important oil industry as part of a declared push toward socialism, announced plans last month to take ownership of Helmerich's rigs.

The rigs haven't been used since late 2009 and the U.S. company said it wasn't going to put them back into service until PDVSA paid it the $43 million it owed for work that was already completed.

PDVSA President Rafael Ramirez said the government decided to nationalize Helmerich's rigs because the country couldn't afford to let them continue to sit idle while new wells needed to be drilled.

In a partial response to PDVSA's non-payment to Helmerich, Ramirez accused the company of stubbornly refusing to renegotiate the rates it charged to PDVSA when oil prices were falling in early 2009 and PDVSA was falling behind on its bills.

Venezuela's legislature approved the nationalization plan of Helmerich's rigs last week and the government has officially taken control of them. Ramirez said PDVSA plans to pay Helmerich for the rigs at "book value."

In announcing the nationalization plan for Helmerich's rigs last month, PDVSA also said it reached a deal for oil-services work with U.S. energy giant Schlumberger Ltd. (SLB).

Helmerich said in its statement Tuesday that it leaves Venezuela "with our heads held high," adding that the company fulfilled all of its contractual obligations. It also said it trained and employed thousands of Venezuelans and achieved an outstanding long-term safety record.

"The loyalty of our employees and many suppliers there will long be appreciated and remembered," Helmerich said.

Helmerich said its future is partly reflected in new rig-building for "paying customers."

Officials at PDVSA weren't available to comment on Helmerich's latest statement.

-By Dan Molinski, Dow Jones Newswires; 58-414-120-5738; [e-mail]